Saturday, March 15, 2014

Financial Conduct Authority fails, yet again, to impose the rule of law on the banks!

Two firms are facing
enforcement action from the Financial Conduct Authority for anti-money
laundering failures, while the regulator is reported to be considering similar action against
three others.

Sharon Campbell, the
FCA’s head of financial crime and intelligence, declined, predictably, to name
the firms facing enforcement but stressed the issues were not new. The
regulator, it is reported, is especially concerned with firms’ handling of
high-risk customers such as politically exposed persons (PEPs).

“The thing that
surprises me, when it boils down to it, the things we are finding are not new
issues…the management of high-risk PEPs is not a new thing,” she told delegates
at City & Financial’s financial crime conference on 4th March.

The FCA, previously
the Financial Services Authority, has fined a total of nine banks in the past
five years for AML failings, and much of the recent focus has been on firms’
handling of PEPs. In 2011 the regulator launched a scathing report on similar
failings in this area.

The FCA is also
concerned about the quality of AML compliance across the board and is worried
firms are ‘de-risking’ their client bases to avoid proper compliance.

Campbell said she had
found the failings “depressing” and said in one of the settled cases, a firm
had an unemployed housewife as a client whose account had more than £1 million
flowing through it over a period of time. “These are basic, simple principles,”
she said. “The level of anti-money laundering compliance is a matter of
concern.”

The regulator was
worried the drive for profits was overriding the need to properly check
high-risk clients. “Some firms are not willing to make tough decisions if
profits are at stake,” she said, adding that some problems were serious and
persistent.

Over the past year
or so, many firms, as a result of the big fines imposed in the United States
for serious AML failings, have started to quietly drop clients perceived as
risky. This has become an issue in the UK and the FCA is concerned, Campbell
said.

“If firms are taking that ‘de-risking’
strategy because of competition [issues] we will have something to say on it,”
she said.

Delegates were told
the FCA had a range of available options aside from enforcement. Last year it
made six ‘early interventions’ in banks where it discovered serious weaknesses.
The banks were told to remedy problems immediately. Campbell questioned why the
FCA had to go in and find the problems, however. “We are not a consultancy,”
she said.

Sharon Campbell's
observations possess all the predictably dreary and complacent attitudes
expressed by British financial regulatory agencies. She talks about 'a range of
available options aside from enforcement'!

What options?

One of these days,
Sharon Campbell and her bosses are going to wake up to the realisation that
they are a law-enforcement authority, whether they like it or not!

They are not a kindergarten,
or a bunch of social workers, their job is to apply and enforce the law as it
pertains to the administration of financial services.

The trouble is that
too often and for far too long, those charged with the administration of these
laws, whether it was in the old days of the Securities and Investments Board,
or its successor, the unlamented Financial Services Authority, or now its
doppelganger, the Financial Conduct Authority, no-one inside these agencies has
ever wanted to grasp the nettle of taking on board the responsibility for
prosecuting those financial practitioners who willfully flout the law!

Howard Davies,
former Chair of the FSA was described as having no appetite for prosecution,
because, as it was described to me by an FSA staffer, '...he didn't want his
reputation to suffer in the same way as that of Barbara Mills or George Staple..."

If the head of the
regulatory body refuses to accept the powers that Parliament had prescribed for
him, perhaps we should not be surprised if that policy became enshrined in the
culture of the agency and its successors in title.

But just because one
senior Mandarin Administrator didn't have the bottle to take up the challenge,
doesn't mean that the FCA should renounce its responsibilities.

Sharon Campbell
doesn't have any right to be depressed by the findings of her review, and she
is right when she states,“...these are basic, simple principles..,” she said.
“The level of anti-money laundering compliance is a matter of concern.”

So what are you and
Tracy McDermott going to do about this wilful and deliberate refusal to obey
the law. These firms are sticking two fingers up at you and you are doing nothing
about it.

It is futile
expecting banks and financial companies to worry about the arcane minutiae of
the Money Laundering Regulations, all the time you succeed in giving them the
impression that you don't care about this egregious activity.

You can preach to
these bastards all you like and they will still ignore you.

These wilful
failures to implement meaningful responses to the Anti Money Laundering
Regulations possess penal sanctions, and these have now got to be imposed, with
rigour.

This is a battle you
people can win, if you really want to, but it's no good just hoping, you must take the fight to the enemy.

Any firm that has
been under a compliance review and has still failed to take the necessary steps
to implement the procedures and processes necessary to meet the legal
requirements, should be summoned to court, and convicted.

And the buck should
stop at the office of the Chief Executive. He or she should be told, by you, in
no uncertain terms, where the failings were perceived to be, and what those
failings were, and what steps you expected to be taken to rectify the matter,
and a future date for a new inspection should be made.

Then if the
processes were not completed, criminal
proceedings should follow.

I am not expecting
these men to go to prison in the first instance, although their wilful refusal
to take the necessary degree of responsibility for preventing and forestalling
money laundering is a serious matter, but any fines will be levied on them
personally and will not fall upon the institution. The errant director will
also now have a criminal record, which will directly impact his ability to be
construed as a fit and proper person.

I guarantee you, Ms
Campbell, that after the second such conviction, you will observe a gadarene-like
rush for directors to be observed to be putting their houses in order.

You have no excuses
any more. You must name and shame the institutions you have presently
sanctioned, so that we all know which banks are refusing to accept their
responsibilities under the law and are flouting your authority.

Such knowledge would
have a big impact upon the investing public, it would have a direct impact on
me, because I would be using that information to write to the Chairman of the
bank, if my bank was among those named, and demanding that he do something to
bring the bank into line!

Fining banks is a
waste of time, why do you want to punish the shareholders?

On Thursday13th
March, Thompson Reuters plc held a webinar which attracted over 1,000
interested practitioners from all over the world. The discussion focused on
'The Key Priorities for Customer Identification and Monitoring in 2014'.

It was very obvious
that the basic client identification procedures and the need to monitor
transactions is still an issue which the financial services world is still
managing to ignore, despite all the rules and regulations applied for their
enforcement.

This country is
facing a tsunami of dirty money flooding into the City, particularly from
Russia and the Ukraine. These two countries are among some of the most corrupt
criminal states in the world, and their oligarchs are men who in so many cases
have become wealthy beyond the dreams of avarice, by criminally looting the
assets of the former Communist state.

George Osborne,
David Cameron, and their London mayor mate, Bo-Jo may welcome this influx of
dirty money, as far as I can tell, the Tories are very relaxed about the
sources of criminal cash being deposited in the City, but it does no exonerate
banks from ensuring the full implementation of the regulations demanding full
due diligence on the sources and provenance of the funds being deposited, and
the nature and quality of any PEPs seeking client status.

So, time to dig out
the handcuffs, Sharon, and start arresting some of these banksters who seem to
believe that they can continue to commit criminal offences without your agency
having the guts to do something about it!

4 comments:

Is your monies safe in these accounts ---- definitely NOT.Would you get your money back if every body decided to withdraw all their accounts – NO WAY.Economic Experts say that there would only enough money to repay 50% of their clients.Are you going to be in the 50% --- that loose your money.-- Get it out NOW.

2012 -- - June. -- Published in Anglo INFO .Geneva.--- USA Trust Fund Investors were sent false and fraudulent documents by Pictet Bank.Switzerland. in order to collect large fees. ( Like MADOFF) ---Even after the SEC in the USA uncovered the fraud Pictet continued to charge fees and drain whatever was left in these accounts. Estimated that $90,000,000 million lost in this Pictet Ponzi scheme.

2012 - - - July. -- De – Spiegel. -- states – Pictet Bank uses a letterbox company in Panama and a tax loophole involving investments in London to gainGerman millionaires as clients.

All the fines that crooked Swiss banks have incurred in the last few years exceeds £75.Billion. It is also calculated that the secrecy " agreements" with regards to tax evation by their clients will cost the banks another £450 Billion.( paid out of your monies.)

The banks are panicking --- the are quickly restructuring their banks ---- from partnerships --to " LIMITED COMPANIES." ----- this will probably mean that in the future --- they could pay you only 10% of your monies " if you are one of the lucky ones" ---- and it be legal.

About Me

Having spent my career dealing with financial crime, both as a Met detective and as a legal consultant, I now spend my time working with financial institutions advising them on the best way to provide compliance with the plethora of conflicting regulations and laws designed to prevent and forestall money laundering - whatever that might be! This blog aims to provide a venue for discussion on these and aligned issues, because most of these subjects are so surrounded by disinformation and downright intellectual dishonesty, an alternative mouthpiece is predicated. Please share your views with what is published here from time to time!